LNG Market in Asia. - A Japanese Perspective on the LNG Industry - October 14 th, Industry Research Department

Transcription

1 LNG Market in Asia - A on the LNG Industry - October 14 th, 216 Industry Research Department Copyright (c) Mizuho Bank, Ltd. All Rights Reserved.

2 Contents 1 Energy Policies in Japan P. 2 2 P. 9 3 P. 15 1

3 Primary Energy Supply in Japan In the past 4 years, Japan has gradually created a diversified energy portfolio in order to strengthen its energy security. Fossil fuels account for more than 8% of primary energy supply in Japan, playing an important role. Primary energy supply in Japan Fossil fuels share of primary energy supply in Japan (Mtoe) Renewables Nuclear Coal Gas Oil Oil crisis Forecast 95% 9% Oil crisis 92% 92% 92% 92% 91% Forecast 9% 3 87% 89% 88% 88% 2 85% 85% 1 83% 82% 82% 83% 8% 81% 81% (FY) (FY) (Source) Compiled by Mizuho Bank Industry Research Department based on data from METI and IEEJ 2

4 Electricity Generation by Source in Japan To make up for the lost power generation from nuclear plants, fossil fuel fired plants, especially LNG plants, have carried the load. Japan s electricity generation by source Fossil fuel consumption for electricity generation (TWh) 1,2 1, % 34% 11% 18% Renewables Nuclear Oil Coal LNG 9% 9% 31% 11% 26% Great East Japan Earthquake 14% 29% 1% 9% 8% 25% 32% (Mtoe) Oil Coal LNG Great East Japan Earthquake 2 26% 24% 29% 44% 2 (FY) (FY) (Source) Compiled by Mizuho Bank Industry Research Department based on data from IEEJ and FEPC (The Federation of Electric Power Companies of Japan) (Note) Renewables include hydropower. Oil includes LPG and other oil products. Based on figures for Japan s 1 major electric power companies. 3

5 Japan s LNG Import Breakdown by Country Source and Importing Company Japan has gradually diversified its LNG import portfolio. Australia is the largest LNG source for Japan, accounting for 23% of LNG imports in FY 215. Power companies and gas utilities are major importers of LNG in Japan. JERA, the JV between TEPCO and Chubu, accounted for 43% of Japan s LNG imports in FY 214. Japan s LNG imports by source country Japan s LNG imports by company (Mt) Other 1% PNG 5% Brunei 5% UAE 7% Indonesia 8% Russia 9% (FY) Qatar 16% Malaysia 19% Australia 23% Tokyo Gas 16% Toho Gas 3% Osaka Gas 9% Gas utilities 29% Other EPCOs 14% Other gas utilities 1% Other 4% Japan's LNG imports (FY214) 89 Mt Kansai 1% 1 EPCOs 66% Chubu 15% TEPCO 28% JERA (TEPCO+Chubu) 43% (Source) Compiled by Mizuho Bank Industry Research Department based on data from the Trade Statistics of Japan (FEPC; The Federation of Electric Power Companies of Japan) and Tex Report (Note) EPCOs: Electric Power Companies 4

6 Japan s Energy Policy Developments Jun. 21 Mar. 211 Sep. 212 Dec. 212 Apr. 213 Apr. 214 Jan. 215 Jul. 215 Jul. 215 Basic Energy Plan (Cabinet decision) Great East Japan Earthquake, Fukushima Accident Energy & Environmental Policy announced by DPJ Change in Government (DPJ LDP) The Policy on Electricity System Reform (report) 4 th Basic Energy Plan (Cabinet decision) The Policy on Gas System Reform (Report) Long-term Energy Supply and Demand Outlook (METI decision) Submission of Intended Nationally Determined Contribution (INDC) for COP21 Former basic energy plan Discussions and announcements made under the DPJ (Democratic Party of Japan) administration Zero nuclear was one option for the energy mix. Plans for full deregulation and unbundling of the electric power sector announced. Fundamental Principles of Energy Policy: 3E + S Energy Security, Economic Efficiency, Environment + Safety Plans for full deregulation and third party access to LNG regasification terminals etc. are announced. Energy Mix in 23 GHG emission reduction of 26.% by FY 23 compared to FY 213 (Source) Compiled by Mizuho Bank Industry Research Department from government documents 5

7 Power Generation Mix in FY 23 To achieve 3E+S, the government will promote energy conservation, the increase in renewable energy, and the improvement in thermal power efficiency. Electricity demand in FY 23 Generation mix targeted in FY 23 (TWh) 1,2 1, 8 Energy conservation: Economic growth: TWh +1.7% per annum -17% compared to BAU 1% 8% 6% 1% 11% 1% 29% 15% 8% 3% 22-24% 2-22% 3% Renewables Nuclear Electricity demand: TWh Electricity demand: 98.8 TWh 4% 2% 25% 29% 43% 26% 27% Oil Coal LNG FY213 (actual) FY23 (target) % FY21 (Actual) 213 (Actual) 23 (Target) (Source)Compiled by Mizuho Bank Industry Research Department from government documents 6

8 Japan s Intended Nationally Determined Contribution (INDC) for COP21 Japan s INDC for FY 23 is to reduce total GHG emissions by 26.% compared to FY 213. Energy-originated CO 2, which accounts for approximately 9% of GHG emissions in Japan, will be reduced by 25.% compared to the FY 213 level. Base years Target year FY 23 Total GHG emission Energy-originated CO 2 Non-energyoriginated CO 2 Methane Nitrous oxide Fluorinated gases (HFCs, PFCs SF 6,and NF 3 ) Overview of Japan s INDC FY 213 and FY 25 FY 213 is the base year mainly used for presenting Japan s INDC -26.% compared to FY % compared to FY % compared to FY % compared to FY % compared to FY % compared to FY % compared to FY % compared to FY % compared to FY % compared to FY % compared to FY % compared to FY 25 (Mt-CO 2 eq) 1,75 1,5 1,25 1, GHG reduction target in Japan s INDC Total GHG emission Energy-originated CO 2 Other GHGs Energy-originated CO2 Target -26% (FY) (Mt-CO 2 eq) 1,75 1,5 1,25 1, Energy conversion Transport Residential Commercial Industry Target -25% (FY) (Source) Compiled by Mizuho Bank Industry Research Department from the government s Submission of Japan s Intended Nationally Determined Contribution (INDC) 7

9 Deregulation of the Power and Gas Industry in Japan Through electricity and gas system reform, the Japanese power and gas utility sectors will be gradually deregulated. Chronology for Japan s power and gas industry deregulation Jun.214 Apr.215 Apr. 216 Apr. 22 Electricity system reform Publication of Amended Electricity Business Act Establishment of the OCCTO Full retail competition Unbundling of T/D business and full liberalization of retail rates Jun.215 Apr. 217 Apr. 222 Gas system reform Publication of Amended Gas Business Act Full retail competition Unbundling of pipeline business (Source)Compiled by Mizuho Bank Industry Research Department from government documents (Note)OCCTO: Organization for Cross-regional Coordination of Transmission Operators 8

10 LNG and Natural Gas Prices Japan s LNG import price has been higher than the natural gas prices in Europe and the U.S. In particular, the natural gas price in the U.S. remains at a low level due to the production increase of shale gas. The LNG spot price has seen a downtrend since 214, and decreased to less than $5/MMBtu in March and April 216. One of the reasons for this decline may be looser demand/ supply conditions due to the start of production at new LNG projects. (USD/MMBtu) LNG, natural gas and crude oil prices Crude oil price (JCC) US(Henry Hub) Japan LNG import price Europe (NBP) Canada (AECO) Japan s LNG Import Price and Spot Price (USD/MMBtu) Japan LNG import price 8 Platts JKM 6 METI LNG spot price survey 4 (Source) Compiled by Mizuho Bank Industry Research Department based on data from EIA and the Trade Statistics of Japan 9 (Monthly) (Source) Compiled by Mizuho Bank Industry Research Department based on data from EIA, the Trade Statistics of Japan, Platts and the METI s LNG spot price survey (Monthly)

11 LNG Import Volume Global LNG import volume has increased with growing natural gas demand. However, world LNG imports have remained fairly flat the past few years. Global LNG import volume Change in LNG import volume (215 vs 214) (Mt) Middle East Americas Europe Asia and Oceania (CY) Thailand Pakistan China Taiwan Japan South Korea Other Asian countries Asia total Americas Europe Middle East World (Mt) (Source) Compiled by Mizuho Bank Industry Research Department based on data from GIIGNL and Cedigaz (Source) Compiled by Mizuho Bank Industry Research Department based on data from GIIGNL 1

12 LNG Import Volume by Country Country Volume Share Japan % France % Spain % Belgium % South Korea % US % Taiwan.7 1.3% UK.4.1% Italy.2.4% Total % (Mt) Country Volume Share Japan % South Korea % France % Spain % US % Taiwan % Italy % Belgium % Turkey % Greece.3.3% Puerto Rico.3.3% Portugal.2.2% Total % The number of countries that import LNG has more than tripled in the past ten years. The top 5 LNG importing countries are all in Asia. Combined LNG imports to Japan, Korea, China, India and Taiwan accounted for 68% of global LNG demand in 215. (Source) Compiled by Mizuho Bank Industry Research Department based on data from GIIGNL, BP and Cedigaz 11 LNG import volume by country Country Volume Share Japan % South Korea % Spain % UK % Taiwan % France % China % India % US % Italy % Turley % Belgium % Mexico % Chile % Portugal % Brazil % Kuwait 2..9% Argentina 1.3.6% Canada.9.4% Greece.7.3% Dominican Rep..6.3% Puerto Rico.5.2% UAE.1.5% Total % Country Volume Share Japan % South Korea % China % India % Taiwan % UK % Spain % Turkey % Mexico % Brazil % France % Italy % Argentina % Kuwait % Chile % Thailand % Egypt % UAE 2.2.9% Indonesia 2.2.9% Singapore 2.1.8% Belgium 1.9.8% Jordan 1.9.8% US 1.7.7% Malaysia 1.5.6% Puerto Rico 1.2.5% Portugal 1.1.4% Pakistan 1.1.4% Dominican Rep..9.4% Netherland.6.3% Canada.5.2% Greece.5.2% Lithuania.3.1% Sweden.3.1% Israel.1.% Total % 68% of world LNG imports

13 Global primary energy demand outlook World primary energy demand is forecast to increase mainly due to growth in Asia. Global natural gas demand is forecast to grow at 1.4% per annum through 24. Growth in natural gas demand is expected to be highest amongst fossil fuels. 予測 World primary energy demand by region (IEA) World primary energy demand by source (IEA) (Mtoe) 18, 16, 14, 12, India Middle East Southeast +482 Asia etc +558 China +79 Africa , OECD 13,559 Non-OECD Asia +2,825 Mtoe Other ,934 (Mtoe) 5, Forecast CAGR (213-4) TPED +1.% Oil +.4% Coal +.4% 4, Natural gas +1.4% 3, 2, 1, Renewables +2.2% Nuclear +2.3% (CY) (CY) (Source) Compiled by Mizuho Bank Industry Research Department by IEA World Energy Outlook 215 (Note) TPED: Total Primary Energy Demand Forecasts in New Policies Scenario 12

14 Global electric power demand outlook Asia s electricity consumption expansion will contribute to global power demand growth. As demand expands, natural gas-fired power generation is expected to increase at +2.1% per annum through 24. 予測 World electricity demand by region (IEA) World electricity generation by source (IEA) (TWh) 35, 3, 25, 2, 2,144 +1,872 OECD Non-OECD Asia +9,6 TWh China +2,391 +4,716 Middle East Other Southeast +1,382 Asia etc ,17 India +1,899 Africa 34,457 (TWh) 45, 4, 35, 3, 25, 2, 15, 1, 5, Renewables Nuclear Oil Natural gas Coal Forecast CAGR (213-4) Total generation +2.% Renewables +3.6% Nuclear +2.3% Oil -2.5% Natural gas +2.1% Coal +.8% 15, (CY) (CY) (Source) Compiled by Mizuho Bank Industry Research Department by IEA World Energy Outlook 215 (Note) Forecasts in New Policies Scenario 13

15 Natural Gas Demand in Southeast Asia Global natural gas demand is expected to increase 1.4% per annum until 24. Non-OECD Asia is expected to be a center of this demand growth. In Asia, natural gas net import volume is going to increase. Southeast Asia, which is currently a net gas exporter, is expected to become a net gas importer by 24. Asian natural gas net trade outlook (IEA) LNG regasification plant projects in Southeast Asia (Bcm) Yet-unnamed Lumut Map Ta Phut (expansion) Pengerang Batangas Thi Vai Son My Pagbilao Yet-unnamed Lahad Datu Other Asia Southeast Asia India China Japan and Korea Asia Total total Asia (Source) Compiled by Mizuho Bank Industry Research Department from the IEA s World Energy Outlook 215 report (CY) Bojonegara North Java Central Java (Cilacap) Central Java (Semarang) East Java (Source) Compiled by Mizuho Bank Industry Research Department from IR and JOGMEC materials 14

16 Actions for Recently, natural gas hub development has been discussed in Asia. The discussions have centered on Japan, the largest LNG importer, and Singapore, a commodity trading hub. Actions for natural gas hub development in Asia Singapore In May 213, SLNG received its first commercial cargo and commenced business operations In Jan 216, SGX launched futures and swaps linked to its index of spot LNG prices SLinG Japan At LNG Producer-Consumer Conference 212, Minister of Economy, Trade and Industry brought up concept of LNG futures market From Nov 212 to Mar 213, Ministry of Economy, Trade and Industry held Conference for LNG futures In Sep 214, Japan OTC Exchange launched LNG Non-Deliverable Forward Market At Energy Ministerial Meeting in May 216, Japanese government released Strategy for LNG Market Development Goal: to give Japan status of an internationally recognized hub by the early 22s. (Source) Compiled by Mizuho Bank Industry Research Department from IR materials 15

17 Conclusion Last year, the Japanese government released its Long-term Energy Supply and Demand Outlook. In the target Energy Mix therein, natural gas and LNG remain positioned as strategically important sources for Japan. Global LNG demand is expected to grow from a medium- to long-term perspective, led by Asian countries demand growth. With various LNG trade flows and LNG transaction types expected to emerge, international collaboration is necessary to create a healthy LNG market in the future. Japan will cooperate with both LNG consumers in Asia and LNG producers worldwide, in order to deal with the potential structural changes in the LNG market. 16

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